Apple Inc. Hired Banks To Lead Its First Swiss Franc Bond Sale

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Apple has reportedly hired investment banks for selling bonds in Swiss francs for the first time, says a report from Bloomberg which cites a source aware of the developments. The two banks that will take ahead the sales process for Apple’s Swiss bonds are Goldman Sachs and Credit Suisse.

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Apple taking benefit of negative yield

Increasing demands for Swiss franc-denominated debt has caused government bond yields drop into the negative zone, suggesting that investors are now ready to pay to lend Swiss cash for as long as 10 years. Just last month, the Swiss Central Bank removed the franc’s euro peg, causing the currency’s value to rise sharply.

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Investors want assurance and low risk, which has caused yields on Swiss 10-Year government bonds to drop below zero. Yields dropped following the Central Bank’s move to collect interest on lenders’ deposits, according to Bloomberg. The Swiss national bank said last month that it would slash its interest rate on sight deposits, the cash-like holdings commercial banks keep with the SNB, to -0.75% from -0.25%.

Negative yields will allow Apple to borrow at lower interest rates, as corporate bonds are usually linked to the price of government debt. Although there is no maturity date proposed on the Apple bonds, short-dated bonds could be sold with a negative yield, says a report from MarketWatch.

Apple in no need of cash

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Citing its source, Bloomberg says the Cupertino, Calif.-based company will consider a 10- or 15-year bond, which means the yield would be somewhere in the low digits.

Geraud Charpin, a London-based money manager at BlueBay Asset Management, told Bloomberg, “Given the rates available in Swiss francs, it has got to be definitely attractive for the company.”

The executive added that Apple is not in the need of cash, but when it’s almost free, then why not get it? Since April 2013, Apple has issued bonds worth $39 billion, including a $17 billion sale which was the biggest corporate bond offering ever. As of now, there has been no comment from Apple about the bond sale.

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Aman is MBA (Finance) with an experience on both Marketing and Finance side. He has worked as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, reviewing tech gadgets, playing PC games and cricket. - Email him at amanjain@valuewalk.com
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